Quarterly report pursuant to Section 13 or 15(d)

INTANGIBLE ASSETS

v3.21.2
INTANGIBLE ASSETS
6 Months Ended
Jun. 30, 2021
INTANGIBLE ASSETS  
INTANGIBLE ASSETS

NOTE F — INTANGIBLE ASSETS

In accordance with ASC 350, Intangibles — Goodwill and Other, goodwill and other intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment tests. The Company reviews and evaluates our goodwill and indefinite life intangible assets for potential impairment at a minimum annually or more frequently if circumstances indicate that impairment is possible.

The Company determined the fair value of assets acquired and liabilities assumed using a variety of methods. An income approach based on discounted cash flows was used to determine the values of our trademarks, certifications, customer relationships and FAA certificates. The assumptions the Company used to estimate the fair value of our reporting units are based on historical performance, as well as forecasts used in our current business plan and require considerable management judgment

The Company’s goodwill and intangible assets as defined by ASC 350 is related to our subsidiaries, AerSale Component Solutions (d/b/a AerSale Landing Gear Solutions) (“ALGS”), Avborne Component Solutions (d/b/a AerSale Component Solutions) (“ACS”), and Aircraft Composite Technologies (“ACT”), which are included in the Tech Ops segment, as well as Qwest, which is included under the Asset Management Solutions segment.

Goodwill and other intangibles as of the below dates are (in thousands):

    

June 30, 2021

    

December 31, 2020

Qwest:

FAA Certifications

$

724

$

724

Goodwill

 

13,416

 

13,416

ALGS:

 

  

 

  

FAA Certifications

 

710

 

710

Goodwill

 

379

 

379

ACS:

 

  

 

  

Trademarks

 

600

 

600

FAA Certifications

 

7,300

 

7,300

Goodwill

 

63

 

63

ACT:

 

Trademarks

 

200

 

200

FAA Certificates

 

796

 

796

Goodwill

 

6,002

 

6,002

Total intangible assets with indefinite lives

$

30,190

$

30,190

As a result of the COVID-19 pandemic and its impact on the aviation industry, the Company performed a qualitative impairment analysis as of June 30, 2020 on the indefinite lived intangible assets and concluded there was no impairment. Additionally, the Company performed an impairment analysis on the goodwill for both the Asset Management Solutions and Tech Ops segments and concluded that goodwill was not impaired as of June 30, 2020.

Intangible assets with definite useful lives are amortized on a straight-line basis over their estimated useful lives. Intangible assets with definite lives as of the below dates are as follows (in thousands):

    

Useful Life

    

    

 In Years

June 30, 2021

December 31, 2020

Qwest:

Customer relationships

10

$

7,600

$

8,083

ALGS:

  

 

 

Customer relationships

10

 

80

 

90

ACS:

  

 

  

 

Customer relationships

10

 

1,558

 

1,663

ACT:

  

 

 

Customer relationships

10

 

7,741

 

8,198

Total intangible assets with definite lives

$

16,979

$

18,034

Total amortization expense amounted to $0.5 million and $0.7 million for the three months ended June 30, 2021 and 2020, respectively. Total amortization expense amounted to $1.1 million and $1.0 million for the six months ended June 30, 2021 and 2020, respectively. Accumulated amortization amounted to $4.0 million and $3.0 million as of June 30, 2021 and December 31, 2020, respectively.

Other intangible assets are reviewed at least annually or more frequently if any event or change in circumstance indicates that an impairment may have occurred. As a result of the COVID-19 pandemic and its impact on the aviation industry, the Company performed an impairment analysis as of June 30, 2020 on the definite-lived intangible assets and concluded there was no impairment.

There was no goodwill activity during the six months ended June 30, 2021. For the six-month period ended June 30, 2020, goodwill increased by $6.0 million due to the acquisition of ACT.